Dear SaaStr: The Startup I’m Working At is Getting Acquired. How Much Can I Negotiate?
Unfortunately, as a non-CEO, non-founder of an acquired start-up … you have almost no ability to really negotiate. You can try a little, but it’s rough.
Overall, your ability to negotiate in M&A in any context, in any job, is based on your ability to walk for something better, or just walk. Unless you are the CEO, you have limited options here.
Acquirers will divide the employees into four groups:
- Need to keep, individually. This will be a handful of key employees. They will likely get special retention packages that stretch out over 2-3+ years. You can ask for more here, but it’s hard to do too much here. Most acquirers have a general set of rules regarding what they want to do here. The CEO of the target can try to rejigger things with the acquirer, however. But the changes, if any, are not likely to be epic.
- Need to keep as a group. Beyond the key employees, the acquirer may require 80-90% of a group to agree to new offer letters (e.g., all engineers). You can say No. That may give you some leverage. Or you may just say No, and sometimes, lose your job. As long as the acquirer gets their 80-90%, that’s all they’ll care about. Not you individually.
- Don’t care if they stay. Another group the acquirer won’t care much if they stay or not. Non-critical product managers, customer support and success, etc. This varies by acquirer and type of deal. They pretty much never get any really incentives to stay, maybe some standard stock options as new hires.
- Don’t even want. Often, G&A (finance, legal, etc.) and, in some sad cases, sales and marketing — the acquirer doesn’t even want. They may not even be offered jobs; may be offered short-term transition positions; or be kept on, but with a vague status (“You’re Now Reporting to Idaho”). You can’t negotiate nothin’ much here. Don’t expect nothin’.
The reality is, the golden handcuffs, the big retention packages, etc. — they only go to a handful of folks. And 90-95 times out of 100, the acquirer makes all the decisions here (and makes many mistakes because of it). Because it’s seen as their money, as “extra” compensation on top of the deal price.
Sometimes, you don’t even know what these packages will be until the deal closes, or just before. Oftentimes, your deal champion doesn’t even know. Because it’s often not even really up to her.
So you can try a bit to negotiate. It usually doesn’t hurt to ask nicely. Just be aware if you push too hard, it may blow up a bit on you.